Rent, staff shortages the greatest issues facing Hong Kong retailers

High rents and staffing challenges are the greatest issues facing Hong Kong retailers according to a new report from KPMG and the Hong Kong Retail Management Association.

In an industry in need of transforming to win over customers and prospective talent, KPMG and the HKRMA concluded that a wider adoption of technology and targeted staff training is needed to create a competitive edge.

High rents was cited by 79 per cent of the 281 retailers with operations based in Hong Kong who participated in a survey on which the report is based. Behind that were a shortage of suitable staff in the territory and high turnover rates.

A majority of those surveyed expect the undersupply of talent to lead in the next two years to lower customer service quality, slower or negative sales growth, and diminished staff morale and productivity. Each of the three effects is anticipated by more than half of all respondents.

“The retail industry is a pillar of Hong Kong’s economy, and its workforce is vital to its continued success,” said Alice Yip, partner and head of consumer and industrial markets for Hong Kong at KPMG China. 

“Retaining those who work in retail and making the industry more attractive to prospective employees are high priorities.”

The most difficult roles to hire for are front-line customer service staff and retail salespersons, at 72 per cent each. They were followed by technicians supporting retail technologies/digitalisation/e-commerce (64 per cent) and supervisors or managerial grade staff (63 per cent). Retailers also recognise they need a technologically savvy workforce to lure customers and prospective talent.

HKRMA chairman Annie Yau Tse, said the new era of retail enabled by the latest technologies is essential not only to customer experience but also to millennials setting their sights on careers in the industry.”

Room for improvement

Customer service in Hong Kong was rated by survey respondents and focus group participants as comparable to two years ago and showing room for improvement. However, if the retail manpower shortage persists or worsens, customer service could suffer, affecting Hong Kong’s image as a shopping destination compared to other cities. The lack of talent could also frustrate the industry’s ability to transform technologically, further hindering its competitiveness regionally and globally.

Anson Bailey, partner, head of consumer and retail for Asia-Pacific and head of technology for Hong Kong at KPMG China, said the next generation of talent in Hong Kong needs to be nurtured, and retail staff need to up-skill at all levels. 

“If traditional businesses stand still, they are finished.”

Those surveyed singled out reinforcing staff training as the top strategy they would consider in the next two years, at 64 per cent. That was followed by providing higher staff incentives (57 per cent), adopting technology-enabled service/automation (53 per cent), highlighting career possibilities associated with their brand (52 per cent), and hiring more mature or older staff (52 per cent).

The Greater Bay Area initiative represents a significant source of opportunity for retailers. Despite opinions about the vast economic development plan being mixed, industry leaders expressed optimism it could help address Hong Kong’s talent challenges.

Prospective customers should also be cultivated in light of the GBA, said Tse. “The bulk of visitors to Hong Kong are millennials from Mainland China. Most of these people are tech savvy, so embracing technology will be vital to meeting the wishes of shoppers from across the GBA,” she noted.

KPMG and the HKRMA jointly conducted the survey earlier this year to determine the greatest issues facing Hong Kong retailers, for the report Minding the Retail Gap: Hong Kong’s talent challenges and future strategies.

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